VIDEO — Financing is the Biggest Question in Lithium Right Now

In a conversation with the Investing News Network at Toronto’s Mines and Money Americas event, M.Plan International Managing Director David Anonychuk explained how the electric vehicle revolution will see several different battery metals find their place in the spotlight.

“I think the story is quite interesting for all of them because they’re all going to move together based on the demand that we’re going to see from electric vehicles, as well as the energy storage space,” he said.

“I think one thing to put this all in perspective is we probably hear the most about lithium right now, and that’s probably one that’s most well known in terms of what people talk about demand,” Anonychuk added — though he noted that financing remains a key issue in the space, with lack of technical knowledge keeping away “some of the financial community.”

As Anonychuk further discussed the hype surrounding lithium, he touched on how cobalt will also see major growth in terms of demand, albeit a little bit later on.

“People are forecasting somewhere around quadrupling demand around 2025. If we compare that to cobalt, looking at cobalt demand today of somewhere between 110,000, 120,000 tonnes … it’s going to double sometime around 2027/2028 based on some of the leading third-party forecasts, and then quadrupling somewhere around 2035,” he explained.

While he had plenty of praise for the big battery metals, Anonychuk believes vanadium deserves more attention than it’s currently receiving, and feels the energy storage space is a place to keep an eye on.

“A lot of the focus out there, especially because of the automotive side, is all electric vehicles, but we should also be cognizant and talk about the wider energy storage space because there are a lot of competing technologies of which lithium-ion battery is one of the competing technologies. And I think vanadium definitely deserves its place,” he concluded.

Lithium in 2018

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INN: Since it’s the first time that we’re speaking, can you let our audience know what your role is right now?

DA: I’m the managing director for an independent consultancy. We do resource estimates and studies for junior mining companies, as well as due diligence for the financial community and the specialty minerals and metal space. So namely lithium, cobalt, graphite, rare earth and high-value industrial minerals.

INN: We’re here at Mines and Money Toronto, and yesterday you were part of a panel discussing battery metals. What was your main takeaway from the panel?

DA: There is a lot of excitement if you look at even some of the other talks that happened during the day. They had a competition, they had a gold project, they had a zinc project and a graphite project, and the panel voted on the one that was more interesting and they chose the graphite one. It’s obviously very topical today in terms of what we hear on the battery metal space, so I think there’s a lot of interest in the room just to hear what people have to say.

INN: Alright. And there’s been a lot of talk about  battery metals — as you said we have lithium, cobalt, nickel, maybe to a lesser extent graphite. But what would you say you’ve seen as the most interesting battery metal this year. Do you have a pick? A top pick from those?

DA: It’s hard to say, to pick one. I think the story is quite interesting for all of them because they’re all going to move together based on the demand that we’re going to see from electric vehicles, as well as the energy storage space. I think one thing to put this all in perspective is we probably hear the most about lithium right now, and that’s probably one that’s most well known in terms of what people talk about demand.

Looking at today, people are forecasting somewhere around quadrupling demand around 2025. If we compare that to cobalt, looking at cobalt demand today of somewhere between 110,000, 120,000 tonnes … it’s going to double sometime around 2027/2028 based on some of the leading third-party forecasts, and then quadrupling somewhere around 2035.

So cobalt is going to lag a little bit from lithium from the demand point of view, but that’s where in the cobalt space it gets quite interesting from some of these primary mines that are going to have to fill the gap. Because cobalt, for example, it’s a by-product of either copper or nickel from that point of view. But … between both I think the highest interest that we see is definitely on the lithium and the cobalt space right now.

INN: Let’s talk then specifically about lithium. We know you have a background in base and precious metals. Can you let our audience know briefly what are the main differences that you see when looking at a lithium project compared to those metals?

DA: What’s interesting on any of these specialty metals and minerals in terms of the development risk phase, if we look typically at precious metals or base metals, it’s more linear in their approach between exploration, the metallurgy, looking at the market … whether it’s a gold or copper project, there’s not a lot of question on the marketing side. Those terminal markets are quite well known.

If we look at lithium, for example, it really doesn’t have its own terminal market. But even in the development risk side, when you go between exploration and even the next step, metallurgy, there’s a lot of test work that needs to be done to understand and unlock what are those minerals and how are you going to economically process them and what are the end-use markets. So there’s a lot of iterative work when we … work on studies to try to unlock value for those projects. It’s definitely lot more iterative that way and that’s where the value creation happens, way early on in the process.

INN: Looking ahead to next year, what do you think can be some of the factors that could impact the market and maybe the ramp up of these projects in the lithium sector?

DA: Right now the biggest question I think everyone asks is on the financing side. I think there’s a lot of interest out there, but the other thing is maybe what’s keeping away some of the financial community is having that deep technical understanding behind these projects. That’s obviously the service that we provide under M.Plan International, is to be able to work with as well the financial community to do due diligence and look at some of these projects and help evaluate and understand what is behind them.

But I think it’s quite interesting because the geographies are quite diverse. We see new entrants, a good example I think is Peru, you have … a company like Plateau Energy Metals (TSXV:PLU) now that’s out there. It’s not just the brines in South America, now you have new entrants.

Lithium in 2018

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You have confidence now in Quebec, for example, with Nemaska Lithium (TSX:NMX) that raised $ 1.1 billion, which is a fantastic example. And a few weeks ago in Toronto at a luncheon, Guy Bourassa, the CEO of Nemaska Lithium, gave a presentation and he talked about how challenging it was to raise his $ 1.1 billion, and in order to get there he had to raise first approximately about $ 70 million with the demonstration plant, then convince the investors to get to that $ 1.1 billion. So there was a lot of work that needed to be done.

Specifically in lithium he mentioned that based on forecast demand, there’s another $ 15 billion that needs to be raised to meet that demand by the mid-2020s. So I think that’s the interesting part, but I think you need to really know what you’re doing on the technical side. And of course we’re happy to have a role in that and as this industry develops.

INN: Then my last question for you today — what would you say is the next battery metal to watch? Is there any of them that you find interesting?

DA: Definitely. I think the one that we didn’t talk a lot about on the panel yesterday was vanadium, and it does deserve a place in terms of the discussion. A lot of the focus out there, especially because of the automotive side, is all electric vehicles, but we should also be cognizant and talk about the wider energy storage space because there are a lot of competing technologies of which lithium-ion battery is one of the competing technologies, and I think vanadium definitely deserves its place.

People are talking about … what percent of demand could they take up. I’ve heard numbers as high as 20 percent, and some people say that’s high. But there’s definitely a core of what vanadium can do in terms of servicing that type of market, and we’re definitely seeing activity on our side in terms of looking at different projects and doing due diligence and studies from that point of view.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nemaska Lithium and Plateau Energy Metals are clients of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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